Trial Date Set for Boeing 401(k) Fee Case

The trial date has been set for the long-pending 401(k)
excessive fee case, Spano v. Boeing. According
to the plaintiffs in the case, arguments in the trial will be heard
August 26, 2015, before the U.S. District Court of Southern District of
Illinois.

Plaintiffs allege that Boeing violated the
Employee Retirement Income Security Act (ERISA) by permitting excessive fees to
be charged to 401(k) plan participants. They also claim that Boeing engaged in
self-serving conflicts of interest, and permitted imprudent funds to be
included in the company retirement plan.

The news comes about eight months after a district court denied Boeing’s request for summary judgment
on the merits of Spano vs. Boeing. The court granted in part and denied in part Boeing’s motion for summary
judgment based on ERISA’s six-year statute of repose. It also denied
plaintiffs’ motion to strike certain reply briefs filed by Boeing—moving the
case one step closer to resolution.

The case arose nearly a decade ago as part of the first
wave of defined contribution plan fee litigation. At the heart of the case is a
familiar challenge: plaintiffs allege that Boeing plan fiduciaries failed to
adequately monitor and disclose fees assessed against participants’ 401(k)
accounts, while simultaneously spending more than necessary on plan investments
and services. The workers alleged that the excessive fees were imposed on the
plan through a combination of both hard dollar payments and revenue-sharing transfers.

The case has already resulted in a series of important
rulings, following initial class action certification in 2008. A subsequent appeals court ruling from Circuit Judge Diane Wood, writing for a three-judge panel of the 7th U.S.
Circuit Court of Appeals, confirmed that situations in which a retirement plan
as a whole is injured at the same time as an individual employee can arise when
the entity responsible for investing the plan’s assets charges fees that are
too high or when the plan has been reckless in its selection of investment
options for participants—and thus that class action suits can be leveled
against employers in such circumstances.

Given the consideration of ERISA’s repose period, the case
could be impacted by a May 2015 decision by the U.S. Supreme Court, widely interpreted to have
strengthened the ongoing fiduciary duty to monitor and remove imprudent funds,
even if the funds were first put in the plan beyond ERISA’s six-year period of
repose.